Eli Lilly's Obesity Empire Faces Threats from Within and Without

Eli Lilly's obesity blockbusters Mounjaro and Zepbound delivered strong Q2 results, but the company's next-generation oral weight-loss pill Orforglipron underperformed in trials, casting doubt on its mass-market capture strategy. A scrappy competitor, Viking Therapeutics, is developing a dual GLP-1/GIP agonist that could threaten Lilly's market share with subcutaneous and oral formulations, potentially disrupting its premium valuation.

Eli Lilly's obesity blockbusters Mounjaro and Zepbound delivered strong Q2 results, with revenue surging 38% to $15.56 billion [1]. However, the company's next-generation oral weight-loss pill Orforglipron underperformed in trials, casting doubt on its mass-market capture strategy. A scrappy competitor, Viking Therapeutics, is developing a dual GLP-1/GIP agonist that could threaten Lilly's market share with subcutaneous and oral formulations, potentially disrupting its premium valuation.

Mounjaro and Zepbound, Lilly's blockbuster diabetes and obesity drugs, drove 68% and 172% revenue growth, respectively [1]. The company's gross margin hit $13.11 billion, and both reported and non-GAAP EPS surged by 92% and 61% [2]. These numbers aren't just impressive—they're a testament to Lilly's ability to scale production and capture market share in a high-margin, high-demand sector.

Orforglipron, Lilly's oral GLP-1 receptor agonist, delivered mixed but meaningful results in the Phase 3 ATTAIN-1 trial. The highest dose achieved a 12.4% average weight loss over 72 weeks, short of the 15% threshold some analysts had hoped for but still a 12.4% improvement over placebo [2]. While Novo Nordisk's oral semaglutide showed 13.6% weight loss in its OASIS4 trial, Lilly's drug offers a once-daily pill with no food or water restrictions, a critical differentiator in a market where patient adherence is king.

Viking Therapeutics' dual GLP-1/GIP agonist, VK-2735, represents a significant threat to Lilly's obesity market share. The subcutaneous formulation, now in Phase 3, could launch as early as 2027, while the oral version, currently in Phase 2, gives Viking a second shot at the convenience-seeking patient population that Lilly is struggling to capture with Orforglipron [1]. The Phase 2 numbers back up the threat, with the subcutaneous version delivering 14.7% weight loss with significantly cleaner tolerability than current options [1].

VK-2735 is perfectly positioned to capture the patients that Lilly's retatrutide can't hold. While retatrutide might deliver blockbuster weight-loss numbers, its triple-agonist mechanism comes with tolerability trade-offs that could drive discontinuations. Viking's cleaner profile targets the population with a body mass index of 30 to 38—the most profitable recurring-revenue segment that generates decades of prescriptions [1].

With these treatments now accounting for over half of its revenue, any market share loss hits twice as hard. Each percentage point Viking captures doesn't just reduce growth—it challenges the entire premium multiple. Lilly bulls might argue the company's deep pipeline justifies today's valuation, and the 38% revenue growth proves this machine knows how to monetize innovation. But the Orforglipron disappointment reveals that even Lilly can't guarantee every pipeline bet pays off [1].

The obesity and diabetes therapies market is expected to hit $48.84 billion by 2030, with oral GLP-1s capturing a growing share [2]. Lilly's manufacturing investments—four new U.S. sites and a $16.5 billion acquisition of Catalent—position it to outscale competitors. However, the entry of VK-2735 could disrupt Lilly's march toward obesity dominance, with the market essentially betting on Lilly's ability to maintain its trajectory.

For investors, the smartest move might be taking some profits on Lilly's incredible run and watching Viking's Phase 2 oral results in the second half of 2025 from the safety of the sidelines. The real disruption story might start to unfold then.

References:

[1] https://www.nasdaq.com/articles/eli-lilly-stock-buy-heres-what-market-isnt-pricing-yet
[2] https://www.ainvest.com/news/eli-lilly-q2-2025-outperformance-orforglipron-pipeline-era-obesity-diabetes-therapies-2508/